2d 720
This diversity action was filed in the District of Kansas by the appellantplaintiff to recover upon a performance bond furnished by the defendant Home
Indemnity Company as surety for Industrial Engineering Co., Inc. (Industrial)
upon allegations that Industrial had breached a written contract for the
fabrication of a metal painting machine. The appellee Keener was permitted to
intervene in his capacity as trustee in bankruptcy for Industrial and
counterclaimed for judgment for payment monies claimed under the contract.
The trial court determined that Industrial had substantially performed its
contract, denied recovery to plaintiff, and awarded judgment on the
counterclaim. The plaintiff's appellate contentions attack the trial court's
findings and conclusions as not supported by the evidence and, more
Hooper knew that Industrial was not a firm of consulting engineers but was
primarily engaged in the sale and installation of heating controls, pumps and
blowers. However, Industrial evinced interest in the project and numerous
discussions ensued during the course of which the concept of the machine was
expanded to that of a fully automatic process for painting coiled aluminum or
steel. In general, the process contemplated a decoiler or unwinder of the coiled
metal, a series of metal treatment tanks, a dry off tower, a paint applicator and
bake oven, and a rewinder or recoiler, all operating through a connecting and
timed system.
After some three months of talks Hooper requested and received on March 29,
1960, from Industrial a price quotation setting out the materials and
components of the machine. This quotation provided in part that: 1) the process
was to be a five stage continuous coil stock finishing system, 2) the decoiler
was to handle coils of 26 gauge steel or aluminum from 4,000 to 6,000 1bs, 24
to 36 inches in width, 3) the process speed was to be 10 feet per minute, 4)
power spray washer and rinse cabinets were to be provided according to certain
specifications and be followed by a drying cabinet twelve feet in length, 5) a
strip coater or continuous roller coater process would be provided to paint both
sides of the metal, 6) a large 42-foot bake oven would be constructed with two
temperature zones of 200 and 500 degrees respectively, 7) a hydraulically
driven coil rewinder would be fabricated to handle coils of the same weight and
size as the decoiler.
During the first week in April Industrial supplemented its quotation with a
layout drawing of the proposed machine. This schematic was not a design
drawing but did indicate the proposed components, the sequence of their
operation and, in general, reflected the parties' broad concept of the machine,
i.e., that metal would be fed off the decoiler in one direction until it had passed
through about half the process, then elevated and reversed in direction and
returned to a recoiler located very near the decoiler.
6
Now, Therefore, It Is Agreed by and between the parties as follows, for and in
consideration of the mutual conditions and covenants as hereinafter set forth.
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1. Contractor shall furnish all of the materials as set forth in the Quotation and
Drawing which are hereto attached and made a part hereof by reference.
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3. Upon the approval of the specifications and drawings above referred to, and
signing of the contract, Owner shall thereupon pay the Contractor, a sum equal
to Fifteen per cent (15%) of the total cost of said project, said total cost being in
the amount of $32,943.00 plus any use and sales taxes. Contractor agrees to do
5. Final payment shall be made by Owner to Contractor within thirty (30) days
after said equipment has been installed and found to be in a workable
mechanical order. Upon receipt of written notice by Contractor to Owner that
same is ready for final inspection, same shall be promptly inspected by Owner,
and Contractor shall thereupon issue a final certificate stating that work
provided for has been completed and that said equipment is in proper working
condition. At the time of said inspection Owner shall notify Contractor in
writing of any and all deficiencies. If contractor is in agreement with said
deficiencies, Contractor will promptly remedy them, * * *.
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7. Owner shall furnish and install all necessary electric starters, stacks for gas
burners, combustion air intakes, exhaust vents, and shall furnish and bring to
within five feet (5) of necessary location electricity, gas, drains, and water lines
at Owner's expense. Contractor is to provide all labor and material as set forth
in said plans and specifications and quotations and is to do all things necessary
for the proper construction and completion of said equipment which shall be
done in a workmanlike manner, it being understood, however, that Contractor is
liable only for the mechanical suitability of the equipment.'
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Printed upon the reverse side of the quotation, and thus incorporated in the
contract was the provision: 'We (Industrial) will not be liable for * * * liability
with respect to use, misuse, purpose or suitability, * * * .' Also listed in the
quotation was a piece of equipment known as a stitcher for use in joining
together two coils of metal.
18
Upon exeuction of the contract, Industrial and its subcontractor, Jake, began
construction of the machine with Hooper conferring with them as fabrication
progressed and not infrequently directing changes. During the initial
construction period Hooper made another out-of-state visit and for the first
time saw an operating strip coater, one using accumulators, a device which
accomplished the stitching of metal coils together without stoppage of the
painting operation. He asked Industrial for a quotation on accumulators for a
machine operating at 20 feet per minute but was refused. Construction under
In early September the machine was considered to be operative and a test run
was made. Both parties agreed that the test was not satisfactory and Hooper
prepared a punch list (a check list of deficiencies) and Industrial undertook to
make adjustments and corrections. In Mid-September a second test was run
with a 350-foot coil of 36-inch aluminum and, again, Industrial undertook to
make adjustments. After doing so, Industrial considered its fabrication work to
be complete and its contract to have been performed. The machine proved to be
an economic failure, due, perhaps, to numerous factors but certainly including
the fact that it could not operate continuously in the sense that an indefinite
amount of metal could be painted without stopping the machine. The machine
required a process shutdown as new coils of metal were stitched together. And
economic success would have been more likely, and probably dependent upon,
a much faster operation than the machine's capacity of 10 feet per minute.
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This court stated in Kansas Turnpike Authority v. Abramson, supra, that "When
the principal object of the contract is to obtain a result * * * the risk of
accomplishing such purpose or result is on the builder.' Glass v. Wiesner, 172
Kan. 133, 238 P.2d 712, 716. Where, however, the contract provides for the
performance of a given undertaking in accordance with prescribed plan and
specification, this rule does not apply, because the contractor is not permitted to
vary from the prescribed plans and specifications 'even if he deems them
improper and insufficient; and therefore cannot be held to guarantee that work
performed as required by them will be free from defects, * * * or accomplish
the purpose intended." The discretion and authority given Industrial would
appear to negate any consideration that it operated within the narrow definition
of a specified manner and method contract. Moreover, Industrial was not given
an engineering design plan as the basis for its fabrication, but drew its own
general layout according to the owner's concept of the proposed machine.
22
We also consider the construction given the contract by the fabricator during
the creation and installation of the machine to be of particular import in its
interpretation. Their approach to the job implies an intent to construct a
machine that would properly handle and paint coils of metal within the defined
limitations. It is difficult to comprehend that either the contractors or the
owners contemplated building such a unique piece of machinery with only its
size and dimensions in mind-- disregarding for contract purposes whether it
would actually and ultimately process and paint metal as originally conceived.
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But it does not follow that the parties' agreement contemplated the end result
that the machine would operate continuously, a primary contention that
appellant makes. Both the contract and the conduct of the parties negative such
a contractual commitment upon the part of Industrial.
25
As the trial court properly concluded, the 'continuous' operation of the machine
had no reference to the ability of the machine to continue to process stock
without being stopped for the stitching of a new coil but clearly referred to the
parties' concept of a coil of metal definite in width but indefinite in length. The
problem of continuous feeding into the machine required accumulators, a stage
not provided for in the agreed layout and specifically recognized by Hooper
when, after the first test he complained in the punch sheet that the machine did
not properly 'brake to stop coil for stitching before entry into clearing process.'
We conclude, therefore, that the obligation of Industrial was not to accomplish
an unqualified end result for a continuous finishing system in that phrase's
broad sense but was limited to a contractual obligation to fabricate a
mechanically suitable machine capable of meeting the parties' concept of a
Affirmed.